The new year is here and now is the time to create financial goals to help you get on track and set yourself up for a more financially stable future. Sometimes getting your finances organized can appear daunting, but by setting a few yearly goals and taking action, it can be easier than you think. Start the year off right by getting started on the five financial goals listed below.
1. Draft a Monthly Budget and Stick to It
Even though this may seem like a common goal, many people neglect to complete this task each month and stick to it. A monthly budget can be the beginning of gaining better control of your finances. When creating your budget, make sure that every penny is accounted for including savings, investments, clothing, food, entertainment, etc. It will not only help you realize what you spend each month, but it will also help direct your focus on areas where you can improve.
2. Take Control of Your Debt
Debt can be one of the primary factors that can hold you back from achieving financial success. Make a reasonable plan to reduce your debt and spending and stick to it. You can start by determining a reasonable amount of debt that you would like to eliminate during the year. Next, determine how much you will need to pay each month in order to reduce your debt by the goal amount. Finally, you will need to look at your budget and find a way to allocate this amount each month, even if it means cutting back on other areas of the budget. It is also important to make sure that you do not add any more debt throughout the year.
3. Make an Emergency Fund a Priority
Medical costs, major vehicle repairs, job layoffs or house maintenance can quickly derail a budget. Make sure that you have a fund set up specifically to handle these unforeseen expenses, so you don't have to alter your monthly budget to accommodate them. A good rule of thumb for an emergency fund is to develop a budget of six months expenses if you are single and don't have a second source of income. If you are single and have a second source of income or married and both spouses work, a minimum of three months is sufficient.
4. Prioritize Retirement Savings
Saving money for retirement is something often put on the back burner until it is too late. The sooner you begin saving for retirement, the more time your money will have to grow and yield a good return. Be sure to take advantage of employer plans and work with your financial advisor to build a financial plan that will be helpful in achieving your goals and dreams.
5. Create a Long-Term Financial Plan
Goals can be more difficult to set if you are having difficulty envisioning the rewards that will come with financial stability. Consider any long-term financial goals you may have such as buying a new house or retirement. Draft out a plan that includes saving, investing and other ways to build the wealth you need to achieve these goals. You can start with smaller goals, so they seem less daunting. Having a plan in place will help you stay on track and guide your financial decisions.
Make this year the year you take control of your finances and get on the right track to achieving your future goals. Consider the five financial goals listed above to help you get started and don't hesitate to get help if needed.
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